Surveillance: Fed Game Plan with Dudley
Bloomberg Surveillance
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What's the Role of Financial Conditions on the Fed's Instability?
Financial conditions are sort of the way that monetary policy impulse gets translated to the real economy. If the Fed raises short-term interest rates, but nothing happens in terms of the bond market and the stock market, it's not going to have much of a restraining impact. So it's really important that the rise in short-term rates affects bond prices and stock prices. That's how the Fed gets traction on monetary policy.
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